Reverse mortgages offer a mechanism for tapping home equity for those who want to stay in their home. Nearly all reverse mortgages today are government-insured Home Equity Conversion Mortgages (HECMs). To make the HECM insurance program financially viable, and to insure that HECM reverse mortgages provide retirees with a reliable source of retirement income, the […]
Author: Mary Jo Lafaye
Retirement Trends, Current Monetary Policy, and the Reverse Mortgage Market
Reverse Mortgage as a Retirement Alternative Having alternative sources of retirement income is critical for those who are currently retired, those retiring in the near future, and those planning to retire in the next 30 to 40 years. One alternative available to many Americans is a reverse mortgage. Surveys show that Americans tend to store […]
HECM Reverse Mortgages: Now or Last Resort?
This study outlines recent changes in the reverse mortgage market and attempts to shed light on two simple questions: Which client-specific and capital market factors should a practitioner emphasize; and Based on these critical factors, how does early or delayed establishment influence whether a reverse mortgage can improve the probability of clients’ maintaining their retirement […]
Standby Reverse Mortgages: A Risk Management Tool for Retirement Distributions
The importance of effective distribution strategies is rapidly increasing as 78 million baby boomers approach retirement over the next decade.1 The diminished role of defined benefit plans, longer life expectancy, escalating health care costs, and poor equity returns over the last decade are just a few of the issues confronting retirees that create a challenging […]
Increasing the Sustainable Withdrawal Rate Using the Standby Reverse Mortgage
Research published in the Journal of Financial Planning has estimated that retirees can expect to safely withdraw roughly 4 percent of their initial portfolio value, adjusted for inflation, each year in retirement (Bengen 1994). However, recent research has questioned whether the 4 percent rule is safe for retirees who are projected to face lower returns […]
Reversing the Conventional Wisdom: Using Home Equity to Supplement Retirement Income
The overriding objective for many retirees is to maintain cash flow throughout their retirement years, to avoid “running out of money” in their later years. Cash flow survival is the central theme of this article. This paper examines three strategies for using home equity, in the form of a reverse mortgage credit line, to […]
The Hidden Value of a Reverse Mortgage Standby Line of Credit
Several recent research articles published in the Journal of Financial Planning have investigated how opening a standby line of credit through a reverse mortgage and strategically spending from this line of credit can help improve the sustainability of retirement income strategies. In this article, I show that the benefits of opening a home-equity conversion mortgage […]
Several New (and surprisingly beneficial) Uses for Reverse Mortgages in: Gray Divorce, Retirement Income Planning, Settling Estates, BK13 and Solving for Foreclosure
Tuesday, July 19th @ 12:00 pm – 1:30 pm, San Rafael Attention Marin County Bar Association Members -Family Section and Others Speakers: Mary Jo Lafaye, nmls #246222, HECM Reverse Mortgage Specialist and Barry H. Sacks, J.D., Ph.D. “Gray Divorce” is increasing. This course will focus on the evolving understanding of the use of reverse mortgages […]
8 Retirement Income Strategies for Baby Boomers
In a recent article on InvestmentNews.com, Jaime Hopkins, a professor of tax at the American College’s Retirement Certified Professional program writes that, “Far too many financial advisers overlook home equity as part of a retirement income plan. With heightened regulatory concerns about doing what is in the best interest of the client, it would be […]
Incorporate Home Equity into Your Retirement Income Planning
Wade Pfau’s article Incorporating Home Equity into a Retirement Income Strategy describes six methods for incorporating home equity into a retirement income strategy through a reverse mortgage. Generally, strategies that spend the home equity more quickly increase the overall risk for the retirement plan. More upside potential is generated by delaying the need to take distributions from […]
